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David Parsons

David Parsons

David Parsons

30 Voices on 2030: What does the future hold?

The pace of change in tax regimes in the “offshore” world that we live in has never been faster.  Whilst some of the initiatives leading up to 2020, such as transparency and exchange of information, may have had relatively limited impact on the levels and nature of business conducted through the offshore world (setting aside the decline in our banking sector), the current and future changes will have a much more marked impact.

By 2030 the number of company incorporations in the Isle of Man and similar jurisdictions will have greatly reduced – Economic Substance legislation, which was just starting to bite by the start of the 2020s, will have had a significant impact.  Furthermore, the OECD’s latest initiatives focussing on payments to, and profits reported in, entities located in low tax jurisdictions will have further discouraged the use of offshore. 

The Island’s zero percent corporate tax rate has its origins in tax exempt companies, which date back to the 1980s.  It would be a brave man that would predict that the current zero/ ten tax regime will remain largely unaltered by 2030.  It is far from clear as to what the ideal replacement model might look like. 

Indeed, with a gradual shift towards taxing consumption (eg sales tax), rather than taxing profits, it’s far from clear as to what the corporate tax regimes of mainstream jurisdictions like the UK (will we have forgotten Brexit by then?), the US and others will look like.  

One thing is clear - taxation competition is unlikely to end any time soon.

Whilst this may sound rather negative, it does not mean that the Island’s economy cannot have a positive future.  Ever more business conducted through the Island in 2030 is likely to be linked to individuals that have chosen the Island as their home – bringing real meaning to the term economic substance.

The attributes of our jurisdiction (physical space, language, culture, stability) combined with a Government that remains close to these international developments and has a track record of being nimble means that we remain better placed than many jurisdictions to survive the choppy waters ahead.